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tv   Squawk Box  CNBC  January 30, 2018 6:00am-9:00am EST

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live from new york where business never sleeps, this is squ "squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out today feeling a little under the weather. we wish him well look at the u.s. equity futures. you are look at triple digit declines once again for the dow today. dow futures indicated down by 157 points below fair value. s&p futures off by 12 1/2. the nasdaq down by close to 40 points below fair value. this comes after a down day for the markets yesterday. the dow and the s&p 500 posting their biggest declines since september 5th. about four months ago. all of this happens with some concerns, if you do see two days of triple digit declines in a row, that's the first time that's happened in the year. the last time this happened was january 30th and 31st of last
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year this all has been happening as treasury yields started to pick up yesterday that kicked off the concerns the two-year treasury yesterday topping 2.16%. that was the highest level since september 8, 2008. you can see the two-year this morning, yields have come back down a bit 2.108% the ten-year is where the focus was yesterday. the yield there nearing 2.73%. that yield backed off a bit, too. we will see the last meeting of fed chair janet yellen today at the fomc >> nice stories about janet yellen today >> the finale here as jay powell gets ready to begin february 1st. some big stories we're watching this morning jpmorgan saying that jamie dimon will stay in his role for about five more years. that time frame could suggest he's not planning on running for political office which has been
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speculated about for some time we talked to him about that last week in davos on this show the bank is promoting daniel pinto and gordon smith to co-presidents and coos pinto oversees corporate investment banking smith runs consumer and community banking. their names have been floated before as possible successors to dimon. quick note, i would contend to you this doesn't suggest he's either running for the president or that these are his successors this is the if you get hit by a bus plan, more than a signal to the markets that these are necessarily the two in line. >> i would agree >> they are the two in line today. they may not be the two in line five years from now. it's also not clear to me this changes -- to the degree we think if you believe he has presidential ambitions, and he didn't really say no last week >> no. >> so, we'll see where all this goes the white house will not apply
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new sanctions on russia for its alleged meddling in the 2016 election saying current sanctions are already working. this comes as the treasury department released a list of top russian businessmen with ties to have muvladimir putin russia firing back this list labels everyone as an enemy. and microsoft issuing an emergency patch after the spectre patch caused computers to restart spontaneously >> so a patch to fix the patch >> undoing and redoing microsoft says the update intels patch. this comes a month after intel confirmed its chips were affected by vulnerabilities. if you have one of these computers, your computer all of a sudden was starting randomly
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that was a problem shares of metlife dropping after the company postponed its earnings release the insurance group warning of material weakness in its financial reporting forcing it to boost reserves by 5$550 million. the numbers will be worse than expected, but they won't get them out yet the stock down 6.8%. s.a.p. says that its u.s. unit agreed to buy callidus software for 2$2.4 billion you can see callidus shares are up this morning. rambus reporting fourth quarter results in line with estimates but has a weak first quarter outlook due to new accounting rules that changes the way it treats revenue from
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cost mer customers. and waymo making a push into the ride hailing business. they finalized an order for thousands of self driving chrysler pacifica minivans it will be less than 10,000 vehicles, but the question is when these fully autonomous vehicles will hit the road we talked to dara last week from uber who suggested autonomous vehicles in his mind, they're probably the number two or three player in the space, he doesn't think they're coming in a meaningful way for another decade we have that versus the waymo version of the world, and then you have elon musk who thinks it will happen yesterday. >> and my whole countdown to autonomous vehicles is when my kids are turning 17, which is the legal driving age here i would like to see them before that >> you don't want them driving ever >> i want them to drive and practice, but there are times if it's late at night you might feel more secure
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this brought me over to the autonomous driving i never wanted it for myself i would rather drive myself. >> would you do it >> potentially but in the front seat because i get sick in the back seat. back to the markets, futures are under pressure check things out the dow futures are down by triple digits. again, at this point down by 161 points for the dow futures 13 for the s&p and the nasdaq is off by 40 points if we see triple digit declines today, back-to-back days where the dow is down by triple digits, natthat's the first tim that's happened in a year. look at europe, a lot of this is bleeding over. asia down overnight. europe now is also under some pressure looks like the dax is off a half percentage point as is the ftse in london. in asia, things closed weaker there after the weakness we saw here yesterday the nikkei down 1.4% hang seng was down by just over 1% shanghai down by 1%.
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if you check out oil prices, let's see, we had seen those oil prices creeping higher the entire time we were in davos this morning pulling back slightly back to $65.16 a barrel. check out the dollar and see what had been happening with the dollar across the board. dollar is down you can see the euro trading at 1 1.241. gold prices were down by $1 yesterday they are up by $2.90 to $1,348 an hounounce. president trump's first state of the union address the president telling reporters that the speech will cover a lot of territory including the great successes of the stock market and the tax cuts passed at the end of last year the president will deliver the state of the union address tonight at 9:00 eastern time eamon javers joins us with more
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from washington. >> good morning. you might hear one or two mentions of the stock market in the state of the union address tonight. it's one of the president's favorite topics. this is his first state of the union. last year we saw him in a similar format, but that was just an address to congress. this is the official state of the union, pomp and circumstance we will see tonight. the white house giving us a sense of some topics that the president will cover not a lot of specifics yet on what the president will say. we do know he will be talking about jobs and the economy, and he will talk about infrastructure, the question is whether we will see specifics of his big infrastructure plan which we expect the white house to roll out more detail on in coming weeks immigration has been a hot button issue we'll see where the president comes down on that trade and national security. you can expect a fairly upbeat tone from the president. we saw sarah huckabee sanders the white house press secretary yesterday asked what she thinks the state of the union is. here's how she answered it
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>> i think it's incredible i think you'll hear that in the president's words tomorrow night. look, we have an economy that's booming. isis is on the run we're remaking the judiciary in a way that believes in upholding the constitution there are great things happening in this country. you can expect to hear the president talk about a lot of those, not only what we've been able to go do in the first yeart the great things we'll do in the next seven years after this. >> one thing to watch tonight is if the president singles out specific companies it's something dein hhe did in address last year. we'll see if he does that again this year and what impact is on those particular companies another thing to watch for is whether or not the president touches at all on this controversy of the departure of andrew mccabe, deputy director of the fbi and the continuing ongoing russian investigation, which has been a sore point for
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the president. he might want to leave that aside or haven't some of his frustrations we'll watch for that as well >> talking about companies mentioned. one of those companies mentioned has been at&t, he praised at&t for being one of the first companies to come forward with plans to provide bonuses for their employees. do we think that that may change the dynamic at all one way or the other in terms of their transaction with time warner >> it shouldn't, right >> i'm not vai insaying it shou it shouldn't >> according to the process it shouldn't. that should be done on the merits >> however there are people in the political world and business world who looked at his comments around at&t and said is it possible that things could shift? >> the president mentions it a lot. we saw him mention it again in his interview with joe kernen last week in davos that at&t was first out of the gate. this is a trend that the president likes. companies are savvy on how to
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get on this president's radar screen in a favorable way. how to do the things that don't cost companies all this much but register with this white house and with this president. companies are finding out how to deal with the trump administration we'll see whether it has specific impacts in theory the process is done simply on the merits of the particular case by case situation. not influenced by politics or good feelings in washington. i'm sure companies feel good feelings in washington can't hurt >> we will speak to gary cohn at 8:30 a.m what do you want to hear from him? >> so many things. he said he was torn about staying after charlottesville. he said he wanted to stay to pass tax reform. that was his major goal. he's done that so the question is what is keeping him around now is there another goal he wants
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to stick with the administration for? is that infrastructure what is his vision of that and does he think it's doable? >> we will put that question to him as well as many others thank you. the two-day fed meeting starts today let's get a check on the state of the markets and the economy now. joining us for that is sam st stovall from cfra, and joe lavorgna chief economist for the americas at netaxus. we are looking at 9 fthe future down triple digits today this market has been complaining for years and years, how come the interest rates are not higher, as soon as we see a few ticks, everybody panics. >> sure. when you look to history, we should be seeing a fed funds rate closer to 3% and a ten-year note above 4% based on where we are relative to core cpi
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but i think the question is, okay, we've gone 565 days without a decline of 5% or more which is the longest stretch since world war ii and after that we normally tumble into about a 12% decline. >> this has been a market people have been afraid to short because the earnings news has been so spectacular, growth news has been spectacular, people think i will not start shorting this especially as we are hearing from companies about how well they are doing and how much better they expect to do from the tax cuts >> right we also expect earnings to be at $155 for all of 2018 versus the current estimate of 152. the real question is where do we place the multiple >> i can understand people getting nervous as interest rates pick up, particularly given how low they are moderate moves are a bigger percentage change. again, we're below 3%. the economy is humming along
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is this worthy of some concern i do realize that interest rates are the gravity that holds prices down. i guess the question becomes are stock prices fairly valued based on the economy and earnings at this point or if we see the ten-year move up to 3% what does that mean as a result of where you would like to put your money? >> i feel the market might be ahead of itself now. i don't think we're headed for a recession. and therefore a bear market. i look at housing starts i look at consumer confidence. i look at the yield curve. while the yield curve is flattening, we are still not at the inversion of 80 basis points which is traditionally what we see before the beginning of a recession. so while some hiccups might occur, i don't see us sliding into a new bear market >> joe, let's talk about what we can expect to hear from janet yellen today this is her last meeting, end of her term what do you anticipate what would i you like to hear?
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>> basically things are on course, the inflation is low the economy is humming along essentially just wait and see. we're on track for slow, gradual rate hikes that's key as long as the ten-year note remains comfortably below 3, if it got above 3, only temporarily, the equity market barring a possible correction should do fine sam is right there are really very few imbalances that would suggest the business cycle is anywhere near over. stocks typically do not peak until they see the whites of the eyes of the downturn >> quick note from jim paulson yesterday. he pointed out for the first time in this recovery that the growth adjusted phillips curve turned positive for wages. that could mean that inflation will be here much more quickly than people anticipated. >> i like jim, but get rid of that phillips curve this is like
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jason and michael meyers, this thing won't die. >> from friday the 13th? >> and halloween it won't die give me a break. the phillips curve worked for brief periods of time in the '60'6 '60s and '80s and that's it. >> are you calling us the new japan? that's a worst case scenario >> it is, but japan is doing quite well >> relatively speaking, though they are just getting back to the point where they finally after 20 years are making up fo market losses they saw >> the u.s. is not japan having said that the phillips curve, you see this in other countries, doesn't work. my fear is that the fed goes back to those old habits, thinks that low unemployment -- we'll be down near 3% within the next 18 months, that moves in anticipation of inflation that never comes. >> does it really matter what
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janet yellen says today? >> no really what will be said is patting her on the back for doing a good job during her tenu tenure, then handing off the ball without too much ceremony or fireworks >> anythingi inthey could say -f you think there's some space between the way jay powell thinks about the world and she thinks about the world, anything she could say to maintain -- >> she's not a political person, she's an economist she will say what's on her mind. >> except she may have strong views about where the economy is going. he may have strong views >> i look -- jay powell was there because he worked with randal quarles on the deregulatory side. he's not an economist, that's not a knock. that's not his area of expertise. what matters is who the president appoints as chair of the fomc that person will be chirping in
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jay powell's ear >> is it fair to think jay powell has a much tougher job than janet yellen had? she carried this through it's been beautiful, but she has not seen a big increase in rates, that's the tricky way of trying to dance your way out of the last ten years of policy >> possible, but people said the same thing when she came in for bernanke business cycles don't die of old age. if this economy keeps growing reasonably well, then it will look like jay powell got the best of all worlds >> sam what do you tell people to do? if you think the market is ahead of itself here, but you think good things are still on the horizon, what would you advise people to do now >> focus on what is your investment strategy, because at cfra, we have 11 different portfolios, and 8 of them outperformed their benchmark last year. whether you're looking for total return, whether you're looking for momentum, there are opportunities out there that are
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populated by the cfra equity analysts my feeling is, y there are still opportunities out there. but the market as a whole, i would say don't get caught up in the fomo, fear of missing out mindset and sucked into an advanced hire unless you know wla when to get out. >> our viewers are probably the only viewers who may need fomo explained to them. coming up, it could be tech's biggest deal ever we'll talk about dell considering a sale to vmware >> dow looks like it would open off 145 points down. the nasdaq down about 35 points. s&p 500 off close to 12 points you're watching "squawk box" on cnbc alerts -- wouldn't you like one from the market
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fidelity. we know life can be hectic. that's why, at xfinity, we've been working hard to simplify your experiences with us. now, with instant text and email updates, you'll always be up to date. you can easily add premium channels, so you don't miss your favorite show. and with just a single word, find all the answers you're looking for - because getting what you need should be simple, fast, and easy. download the xfinity my account app or go online today. welcome back big potential deal news. dell considering a same to vmware joining us for more on the rumor that's being called a reverse merger, we'll explain, daniel ives is here
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for those who don't understand what a reverse merger is, i can explain unless you would like to dell is a private company. vmware is a public company this is a backdoorway to becoming a back door company for dell all over again. with dell having an ownership stake in vmware. does this make sense to you? >> when i saw it, i initially viewed it like was it a joke or is this real ultimately i would view it a horror show move if they did a reverse merger in our opinion, look, if they're going to do this, you go down the route of an ipo, because right now the big issue is they have 40 billion plus of debt, given the tax changes, that's been a huge anchor on the ship >> dell has $40 billion of debt. >> yes >> you're saying that's a problem for them now given the tax change >> the big katd catalyst for de
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looking to do an ipo or a liquidity strategy is the tax changes, because of the interest child. >> they can no longerdeduct. >> what's happened is that combined with the market that's been strong, it's an opportunity for them to come out given the emc acquisition. >> michael dell was so happy to be a private company and not deal with share holders again, after everything he went through with carol icahn, feeling like he wasted his time dealing with shareholders >> that's the other thing. this has been a situation where when they went private, it was controversial. when they did the emc acquisition, as well as the tracker stock, it was controversial. i think they view it as a mixed bag. this is not a position of strength that they would be doing this i think that's why if they're going to do it, you do it in an ipo. to do reverse merger through vmware, who would win?
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it would be michael dell t would be silver lake the losers would be vmware shareholders that's why right now they're in a do nun drconundrum in terms oy want to do this. >> the strategic rational, you think combining them doesn't make sense >> because part of it now, is that it's been working well because of the structure they buy emc, you have the ownership stake in vmware. they've been able to pivot from a consumer company to an enterprise it's been successful if you combined it all under one, in our opinion, it would be a lot of risk in terms of what execution-wise, and if they do t would rather do it in a traditional ipo, raise money, sell off -- >> pay down some debt. but how much cue raise in the public markets, how much cue pay down >> i think that's the question here you have 40 billion now in terms of debt. not going pay it all
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it's really what the strategy could be it would be a three-phase approached what i do thi >> what do you think the market cap of the company could be today? >> it would definitely be, in our opinion, you would be looking at something like 3 times, 4 times revenue like in the hundreds of billions of where -- >> so about 1$100 billion >> i think more than that. if you look at vmware itself -- >> how much cash could you get out at one shot? >> i think you could probably only get a quarter to a half out of a shot as well as selling pivotal. so it would be a two-phase strategy >> fair amount of debt for them to handle. if you could get it -- what number do they have to get it to given the tax changes?
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>> about half of it if they could get it down to 20 billion from 40. >> if they can't, what happens >> if they can't, they go on as shave been doing ultimately they have to do something like sell pivotal, so sell some of the assets to pay off 5 billion, 7 billion, 10 billion of the debt. you saw what investors looked like at the reverse merger that's why if they're going to do it, you go through an ipo, reverse merger in our opinion would be a bad move, and i think the losers would be vmware shareholders >> thank you when we come back, president trump ready to deliver his first state of the union address tonight. we'll ask what congress wants to hear next. as we head to break, a look at yesterday's s&p 500 winners and losers
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♪ welcome back, you're watching "squawk box" live from the nasdaq market site intimes square good morning welcome back to "squawk box" right here in times square i want to say from davos, but we're so far from davos. we're warm >> we are warm except it's snowing out here >> but there's a window between us and the snow. it's a different prospect than being in davos >> most people thought we were in front of a green screen any
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way. this morning we have some red arrows the dow opening off about 155 points nasdaq opening down, off about 35 points. s&p 500 looking to open off by 13 points. an update to the story we've been following so closely. saudi arabia's attorney general saying the total estimated value of settlements is 4$400 billion 65 people are still in custody the ag says the settlement in the anti-corruption case included real estate commercial entities, securities and cash. for those of you doing the math at home, that's about 1$106 billion, or more than 1$106 billion. big questions about whether a settlement was in the cards or actually took place with the prince he did that interview with reuters that we showed you yesterday where he said the whole thing was a
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misunderstanding said none of kingdom holding's assets were attributed to the settlement there are other reports that there was a settlement so we're trying to get to the botment mentom of that. tonight marks president trump's first state of the union address. another possible government s t shutdown is less than two weeks away joining us is congressman g gottheimer welcome. nice to see you. you represent my district. >> if you need anything, call me >> let's talk about what you would like to hear from the state of the union do you think this will be a message laying out the president's agenda or do you think this is going to be more a message of bipartisanship, maybe one of working across the aisle?
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what are your thoughts >> i think we should expect both part of this is what he plans, he sets forth the year including infrastructure, fixing crumbling roads and bridges, i hope there's an outreach for democrats and republicans to work together. which we sorely need make sure we get to a budget and move forward >> you are co-chair of the bipartisan problem solvers coalition. we heard a lot about that group, things they would like to get done it's been a tough time to see any bipartisan legislation this goes back several years now in congress. how do you put your best foot forward with that? which sort of legislative approaches do you think are the most likely to win support from both sides of the aisle? >> there's been plenty of gridlock, but what we found, we're 24 democrats and 24 republicans, we get together every week in washington on issues like healthcare, stabilizing individual marketplace and getting premiums down it's an issue we've been working
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on i would like to hear what we will do next to stabilize the marketpla marketplace. infrastructure is a big topic, picking out how to deal with crumbling roads and bridges. we have to deal with that tunnel between new york and new jersey, a threat to the whole regional economy. and issues like immigration reform and getting a daca border security deal done you have real topics, those are the areas we've been coming together around. of course the budget we really want some certainty here we can't run a country this way. every three months, punting and punting. we have to make some agreements. >> you are 48 leaders of a group of 435 if you look at what's happened in any of the votes that have taken place, it has been almost straight down the line you're one of six people again who voted with the republicans on that continuing resolution. so what has to happen in order to see bipartisanship really start to happen on a more
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frequent basis >> the difference between last year and this year, if you look at the senate, now you can't get things through with just 50 votes, you need 60 in the house, there's a growing group that says you can't govern this way so in order for the president to get anything done, whether it's infrastructure or the budget, we all have to come together. you can't just rely on republicans, you need to reach across the aisle, that means coming to the middle looking at things differently. that's what we're working around-the-clock and what we're trying to do you can't just scam things through, you have to see what we want >> having said that, you're angry about what happened with the tax bill, with the tax changes. >> the tax hike legislation. obviously it was very, very difficult in places like my state. they raised taxes. we have real estate prices off 7.3% raising taxes on people in my district, that's a huge problem
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by gutting the state and local tax deduction. we're fighting back against that and trying to find new ways to cut taxes for people we have to deal with that and move forward we have to look at all engines to keep the economy growing. >> congressman, wanted to ask about infrastructure, some complaints you're hearing from democrats that may or may not take place this evening. the president in the drafts we've seen talking about a federal -- adding 2$200 billion in terms of federal spending on infrastructure, but the idea being that it will put some pressure on states to step up and as well as the private sector to step up. some democrats saying 2$200 billion, not enough. and worried about the privatization of things like toll roads, other things having said that, the democrats have long talked about the need for infrastructure square that circle for us. >> sure. i've seen some drafts that have come out early i don't believe you can talk
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about a 20% match to the states. obviously put that huge amount of pressure on the states when we're already paying so much in federal taxes. in new jersey we've been getting back 33 cents for every state tax paid, mississippi gets back $4.38. they keep taking our tax dollars. to me, we need a better return to the states paying more, like mine, and put a bigger injection into fixing our roads, fixing our bridges, dealing with that tunnel between new york and new jersey, getting that built if that goes down, you're talking about 1$100 million a dy loss to the economy. you can't keep punting this. i'm eager to see the specifics here >> congressman, thank you for your time. >> thanks for having me. >> andrew, he is bringing jimmy drake with him tonight to the state of the union, the father of darren drake, one of the victims in the halloween terrorist truck attack in new york city. he will bring him because he's
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working on legislation to try to make sure truck rental agencies have to share information with the fbi and others >> important work. coming up, when we return, we'll talk about the other big deal of the week keurig buying dr. pepper and snapple. it broke nearly 24hours ago. wall street trying to make sense of it. we were scratching our heads, we'll hopefully make sense of it after this break
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big deal, we've been talking about it for the past 24 hours dr. pepper hitting an all-time high yesterday the move coming on news that it is emergencying with keurig green mountain will the stock keep its pop or fizzle out lots of questions about this deal joining us for more now is stephen powers from deutsche bank covering the u.s. beverage, household and personal care sectors. what do you make of this it seems so -- can i say, cra-cra? >> that's the technical term >> that's the technical term >> it was not expected dr. pepper, snapple, they were
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discussed as a potential takeout candidate over the course of time, mostly by other members of the traditional soft drink industry keurig is coming from left field. so there's a lot of questions yesterday from investors as to what the strategic rational, industrial logic of the deal is. you know -- >> are you satisfied yet >> no. there's a lot of questions they talked about cost synergies, warehousing synergies, procurement synergies, overhead costs. >> about getting the stuff on the shelves. >> yeah. >> none of those things are necessary -- none of those things fall from this deal, keurig or dr. pepper/snapple could have executed by themselves they talk about go to market synergies, complimentary distribution channels, sure, but dr. pepper can sell on amazon without keurig keurig can sell in convenience stores without dr. pepper.
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there's loose logic to it. >> we were playing with the idea on the set yesterday, this is a way for keurig to get public without the brain damage of an ipo. >> yeah. definitely a back doorway for j.a.b. to ipo keurig >> so maybe when we were doing some of the math, maybe you pay a premium for that, and you decide if you take the banker fees, brain damage of an ipo, this makes sense in an illogical way. >> i think there's some of that. i also believe we had -- we downgraded dr. pepper snapple yesterday. but we had a buy on dps before there was a value underappreciated by the market and maybe j.a.b. saw that, too so you are getting a solid asset in jps, providing a path to lek k liquidity for keurig >> but you downgraded the shot >> we downgraded the stock
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the $103.75 cash dividend is about a 10% cash premium to where it was trading predeal and you get a chance at this new entity >> any chance regulators step in >> i don't think so. >> at this price tag, any chance that a coke or pepsi or somebody else says i need this so badly, i will step up >> i don't believe so. we don't see that as a huge risk it was a hefty premium for dps versus the predeem prial price >> thankcoming in. coming up, our next guest warns that our complacency autbo the flu outbreak is killing us we'll address his fears when "squawk box" comes right back.
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we have some earnings just out from dow component pfizer. quarterly profit coming in at 62 cents per share, 6 cents above estimates. pfizer gave 2018 guidance that
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comes in above wall street estimates. you're watching that stock up in the premarket close to 2%. >> the guidance for the year is up sharply again, the 2.90 to $3 compares to the 2.78 that the street was expecting. also talking about investing $5 billio expecting. u.s. capitol projects in the next five years. this probably has to do with taxes with the additional stuff that's coming in they've made a $200 million charitable contribution in the fourth quarter and they plan to make a half billion contribution to their u.s. pension plan in 2018 and they're talking about some bonuses they're allocating $100 million for one-time bonuses to nonexecutives in the first quarter. the u.s. currently taking a hard hit from the flu with 49 states reporting widespread activity, but instead of for getting about the flu when it's over each year, our next guest is pushing for more public awareness. he says we need to be much more prepared for the potential
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global outbreak of the disease jonathan quick is nonprofit management for sciences of health also joining us on set our very own meg terrell, dr. quick, no relation, great to see you here today. >> good to be here thank you, becky. >> you know, what you're talking about, flu pandemic is something bill gates told us last week is his biggest concern as well. he thinks that is potentially something that is much more likely to occur than all of these other things that we worry about. where do your concerns come in >> you know, exactly the same. it is -- it is the single biggest threat, and the flu virus is an incredibly wiley virus. and we just have to look back 100 years when we had a highly deadly, highly contagious virus that wiped out 50 to 100 million people it's a big threat, and we don't
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have the defenses we need. >> dr. quick, it's meg terrell just thinking about the flu's impact already, it kills tens of thousands of people in the u.s. every year do we take flu seriously enough as it is even when it's not reached pandemic levels? and what can we be doing better to address it from a medical standpoint >> well, first of all, we're not taking it seriously enough, and the first line of defense that's really effective that we're not taking is good personal prevention habits. good hand washing does work. protecting your coughs from sneezes, not with your hands where you wipe it around, in your sleeves, that works staying home when you're sick, those things work. that's number one. number two is a universal flu vaccine. the problem with flu is it keeps changing it keeps trading its genes with
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other flus and it keeps eluding us we're late getting started on that we're moving on it >> are we investing enough to get to a universal vaccine >> we've looked at vaccines as with medicines, often it's trial and error. the more people in the game, the more likely it is. so it's both under invested, the professor at the university said we need to be putting a billion dollars a year in. we're not coming close to that. >> when you think about the pace of infectious disease and the pace of science and you look back at the ebola epidemic, the way that pharmaceutical companies checked in there.
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all of which ended fairly quickly with less than 1,000 cases and only a few hundred deaths so it was firstly the failure of a good public health system, and the thing that's really scary is that only one out of eight countries worldwide had a system that's able to prevent rapidly detect and quickly respond to these outbreaks. we're only as safe as the least safe country >> dr. quick, you know, you make wonderful points, and we've had a few people, you, bill gates, a few others who have warned about
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exactly what you're talking about, but it doesn't seem like governments are taking those warnings all too seriously we watched it with not only ebola, with zika we've lurched from public crisis to public crisis what do you think the odds are that we can get our acts together what are the numbers of people that died in the flu epidemic just after world war i >> that was 50 to 100 million people that was in the waning days of world war i. our effort to get troops over was probably part of what fueled that but that was a devastating epidemic if that happened, if we had a flu of that same degree of being highly infectious, highly contagious, it would be 200 to 400 million and it would take back the global economy with the force of the great depression.
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so investing in prevention is -- it's just a no brainer. >> how would you assess the government's approach to this though "the wall street journal" has a story from a couple of weeks ago saying the cdc is going to scale back work to dozens of foreign countries because of funding concerns that was funding allocated around ebola and now they're going to have to cut back their work in 29 countries >> the u.s. government should step up. >> the first part of the epidemic >> i asked the director general what made her decide to do that. she said they made the case. so we need to make the case as a professional community and the public we need to say make the world
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safer. >> thank you, doctor we hope we can make the world safer. when we come back, a huge hour big two hours with "squawk box." back in a moment t like it. oh. nuh uh. yeah. ahhhhh. mm-mm. oh. yeah. ah. agh. d-d-d... no. hmmm. uh... huh. yeah. uh... huh. in business, there are a lot of ways to say no. thank you so much. thank you. so we're doing it. yes. start saying yes to your company's best ideas. we help all types of businesses with money, tools and know-how to get business done. american express open.
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good morning, everyone u.s. futures deep in the red adding to yesterday's selloff. what's driving this move lower and where you should be putting money to work is straight ahead. a final bow. janet yellen kicks off her last meeting as fed chair the latest cnbc survey coming up. the countdown is on. what wall street will be watching as president trump gives his first state of the union address. the second hour of "squawk box" begins right now
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live from the beating heart of business, new york city this is "squawk box." good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin along with becky quick and wilfred frost is coming back hoping he is gaiting better and is back in the saddle tomorrow u.s. equities, it's one of the few mornings we've had where we've seen red arrows. dow looking like it will open 152 points down. nasdaq down 38 points. s&p 500 looking to be off 13 points a number of headlines to tell you about. dow component pfizer out with quarterly earnings giving you an upbeat forecast. it becomes the latest company to announce a tax reform related bonus for employees as well as increased investment you're looking at that stock, by the way, up close to 2% in the
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premarket. also reporting earnings this morning, news from insurer aetna which is in the process of being bought by cvs health earned $1.25 per share for the fourth quarter revenue coming in and beating forecasts. aetna says that it expects the cvs deal to close during the second quarter and the first fed meeting of 2018 getting underbe way today the two-day gathering will be the last to be presided over by outgoing fed chair janet yellen. our own steve liesman will have much more on the fed in the next couple of inutes we'll be asking questions when it happens in the afternoon. breaking news out right now. news coming from amazon. berkshire hathaway and j.p. morgan chase these three companies are saying they're planning on partnering up when it comes to their u.s. employee health care again, three companies, three major players involved in this jeff bezos, warren buffet and jamie dimon. they're going to be teaming up, and they say their goal is to
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try to improve u.s. employee satisfaction while reducing overall costs. that's no small fete to be trying to do, but these are three gentlemen who have done some pretty extraordinary things on their own so the three of them teaming up to do this jpmorgan says ceo jamie dimon is going to be staying in his role for about five years we'll talk more about that in a minute in the meantime, this news coming out that these three companies, berkshire hathaway, amazon and j.p. morgan chase are going to be taking their employees, they have a huge number of employees between the three of them. i think amazon has 600,000 employees, berkshire hathaway has about 360 or 70,000. >> 262. >> so that's a combined -- >> are we talking about -- >> over 1.2 million. >> it says the initial focus of the new company will be -- it's a new company. >> right. >> talking about a new company being developed. a lot of people speculated about amazon's role in health care will be on technology solutions that will provide u.s. employees and their families with
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simplified high quality and transparent health care at a reasonable cost. i'm not sure they're suggesting this is relating to -- >> insurance expertise. >> i think they may be broader than that. >> jpmorgan, you have the technology expertise to make this simple, as you say. >> they say the effort announced today is in the early planning stages with the initial formation of the company jointly spearheaded by todd combs from berkshire, hathaway. he's one of the two guys that buffet and munger brought in to run berkshire hathaway's money also the managing director at j.p. morgan chase and beth coletti, senior analyst at amazon bringing together senior leaders. >> look at the final line of the release. longer term management team, hq and key operational details. this is a full launch. >> if you wonder if this is coming from the top or not, there are three 125i78statement and they come from buffet, bezos and dimon.
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buffet says the ballooning cost of health care act as a hungry tape work on the american economy. our group does not come to this problem with answers but we do not accept it as inevitable. rather, we share the belief that putting our collective money behind it can enhance outcomes it's 17 or 18% of the gdp is taken up by this bezos says the health care system is complex. we open it wide eyed hard as it may be while improving outcomes for the employees and families would be worth the effort success will require talented efforts and long-term orientation. jamie dimon, our people want solutions and we want to benefit our u.s. employees, and potentially help all-americans they're laying this out as a blueprint. >> a huge amount of employees to focus on themselves. >> right. >> as you say that, that final
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line from jamie dimon, potentially -- >> sounds like they're forming a new company to do this. >> it does. >> we've had lots of questions virtually everyone coming in here talking about the health care industry has worried about, frankly, amazon jumping into the fr fray this is amazon plus plus are they going to be able to take the technology and the finances. >> you have the insurance expertise of berkshire hathaway. you have the capital of jpmorgan interesting, u.s. banks don't have as much insurance themselves as some of the big international banks do a slight nuance to this. it's something that banks and big financial companies could easily move into. >> we've been talking about how health care has become a bigger and bigger part of the gdp over time and waiting for the government to come up with solutions on this, this could be the private enterprise solution to how to deal with these things. >> 19% of u.s. gdp. >> what do you make of the fact this is not a fully fleshed out plan. >> this is about a page and a
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half. >> they're clearly saying we're going to get together and try to figure this out as opposed to saying, we've figured this out, and we're going to be launching x product, the name of the company is x. >> you wonder who this would impact if you're looking to kind of strip out costs and strip out middlemen. my guess is the insurers will be concerned about this. >> yes >> my guess is the pharmacy benefit managers would be concerned about this remember the insurers we were talking to aetna being out. aetna being bought by cvs because they have to find another way to insure -- >> and drug company retail. >> right we talked last week with the head of humana who is now talking about buying a hospital chain company because, again, they need to be more than just an insurance company to survive. >> there's another line in there as well which i don't know if this would worry potential rivals more or less. this suggests this is a not for profit aim which would mean they're not looking to make much of a margin on it. >> right >> so clearly -- >> the way mr. bezos has run
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most of his for some time. >> right. >> also worth noting, by the y way, berkshire got out of its stake in walmart, which was the -- which was the big competitor to amazon people have said that ultimately the drug business could become a competition to walmart and amazon they're out now. now aligning themselves with jeff bezos someone he's been so complementary of in the meetings in the past two years. i wish i had been in business with this guy. >> the other thing i'd also say is that bezos has always been one of the names sort of mentioned that jamie dimon would have loved to have seen on his board and for various reasons has never happened that's according to sources and reports. anyway, the trio, three of the big success stories in recent years getting together. >> this feels like a big moment. we'll see. we'll see. in the meantime, congress gearing up for president trump's state of the union tonight
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one topic everybody is focused on, this year's infrastructure joining us is senator john bourasso great to see you this morning, senator. thank you for joining us. >> great to see you. great to be with you again. >> we've seen different drafts that have come out in terms of what this infrastructure plan may or may not look like the number being floated at the moment is a $200 billion number from the federal government, which would then be paired up with state money and of course private sector money is that what you understand it to be or could you provide us a little bit of a different hint of how far this is going to go >> that is how i see it, but let's take a step back the state of the union is sound. we have a -- an economy that is strong, healthy, and growing and in that setting, that's how you can really do the kind of infrastructure things that we need to do and do it in ways that revenue is coming in but not raise taxes. you see an incredible amount of investment going on in america today. you've seen it with exxon mobil,
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50 billion apple at 350 billion this is all part of the growing economy and infrastructure is a key part in it it is the next step. we've done tax reform. we've done regulatory reform we've gotten judges in place now we need to go on to infrastructure. >> senator, what is your expectations in terms of just how divided it feels like it is in washington these days, whether democrats who have historically been supportive at least theoretically of the idea of an infrastructure plan, whether they're going to join you hand in hand on this already we are hearing push back from senators in blue states and congress people in blue states saying, look, you know, we don't like the tax plan. we don't want maybe our roads to be private advertisized you might call that being obstinate. is there a chance to do that and for this to happen in a bipartisan way >> the reason i'm optimistic about it is as chairman of this
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committee i went and visited with all the republicans and democrats on this committee. we all know there are critical needs around the country for our infrastructure to be competitive globally we need an infrastructure that's working here at home you're right, chuck schumer came out and said, no, we want a trillion dollars of new government spending on this and wants to raise taxes to do it. we have just cut taxes dramatically nancy pelosi called it armageddon and the end of the world, but the results are coming in. people are seeing it you're seeing it from the standpoint of workers and you're seeing it from the stand point of businesses. so we're not going to turn around and raise taxes for infrastructu infrastructure, period. >> can the federal government afford to pay more than $200 billion? is this an anchoring device that's part of the larger negotiation? meaning without raising taxes is there any math that would get you to double it, to $400 billion, for example >> well, you're looking to find ways to leverage whatever money you put in there to amplify what
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you're spending, but you don't want to waste money when it takes ten years to permit something that takes ten months to build so we need to do a lot of significant streamlining and regulatory reform to just make it easier to get projects done i talked to people who have money, private money, want to do things and it's such a headache to deal with the bureaucracy we're trying to break through that as well. >> senator, i don't know if you had an opportunity to hear what we were talking about just before you came on. >> yes. >> you are a doctor so i imagine you will care about this the idea of warren buffet, jeff bezos and jamie dimon getting together to create a joint venture. not for profit, we don't know about that. >> it is a not for profit. >> to effectively try to streamline and reduce costs in health care. talking about a private sector approach what do you make of that >> well, i like it i've always felt that private sector can do a much better job than government in terms of allocating resources, helping people come up with the right solutions for things without a lot of the waste and those are
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the right three people to do it. i know that, becky, you've visited with some of them this weekend, i think you did as well, andrew they were altogether in the same room that's maybe where they decided to discuss it, but their expertise in the areas that you've outlined is terrific. i think everything they can do shows they know how to drive down costs whether it's warren with geico insurance, whether it's amazon with amazon prime and jamie at the bank. what we're seeing is they know how to lower costs, lower expenses much better than government ever has done probably in the history of this country. so i'm very supportive of what they're trying to do. >> senator borasso, dr. borasso, just running through, we don't have many details at this point. if you were trying to figure out how to cut costs in private health care and you were in the private sector, how would you suggest doing it we're trying to figure out what it means for the insurance companies, pharmacy benefit managers where would you expect to see costs get squeezed a little bit? >> firstly focus a lot on wellness i've done a program in buy
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onlying, the wyoming health fairs. low cost blood screens finding problems early getting early treatment for problems before they get worse i think they can do a lot more with that and government has failed with that but private companies have been able to do that and that was the -- that's the first place i would be getting people more invested, more involved, more educated about their own health which will help lower their costs and certainly fitness is part of it. as you know, you see obesity is the new smoking. we've done a lot to get rid of smoking in this country. we need to focus on people's overall fitness level. obesity is such a major contributor to the health care costs in terms of pain medicines for arthritis, in terms of heart disease, high blood pressure, diabetes so much of these things can be dealt with with diet and exercise from a corporate standpoint i think they're going to be able to do that much better with their employees. >> senator, wanted to also get your thoughts. obviously the two other big headlines of the day beyond what we're going to be hearing from the president this evening is the house intelligence committee monday evening voting to release
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that classified memo circulating in congress. california -- california congressman adam schiff called it a very sad day i think in the history of this committee given that, and you've talked about trying to do things on a bipartisan basis this was not done on a bipartisan basis and to some degree is very critical, mor than very critical of the fbi and d.o.j. and some people saying undermining both the investigation and those departments themselves what do you make of it >> well, there's a process to determine whether this document is released or not i hope that it will be i will tell you saturday a week ago when the government was shut down sitting in my office we had 100 calls from people in wyoming, release the documents one call about the government shutdown so i think it is important for the american people to see this. we want this kind of transparency people want to get to the bottom of this. in terms of all the issues that are going on with investigations, bipartisan select committees working on this there's a special counsel
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looking into it. people just want the answers and i think it would be a good idea to release these documents. >> andrew mccabe should he step down >> he made a decision. i think it was the right decision. >> under pressure to from the president? >> no pressure at all, but certainly the issue of conflict of interest and even the appearance of conflict of interest was there i think it was the right decision for him to make. >> senator, we will watch to hear what the president says this evening and we hope to speak with you very soon again thanks again >> thanks, andrew. still to come this morning, we have more on today's big news amazon, berkshire and jpmorgan all teaming up in an effort to try to revolutionize health care in america. then coming up at 7:30 a.m. this morning, the president is going to be touching on his infrastructure plan in the state of the union address what you can expect with the ceo of cgla, "squawk box" will be right back
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some breaking news, folks. amazon, berkshire hathaway and j.p. morgan chase announce they're going to be partnering on a health care plan. meg terrell joins us this is just a brief announcement pretty bare bones there.
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just getting into early details on this. meg, when you have bezos and buffet and dimon all putting their heads together and throwing their weight behind something like this, you do see stocks immediately take action. >> yeah. amazon has been a huge spectre in the insurance space it's really interesting looking through this release how they say they're creating this independent company that they say will be free from profit making incentives and constraints. really interesting if you parse through it look at the pharmacy benefits managers they handle a lot of the insurance benefits, the drug benefits on behalf of employers. so if you look at express scripts, cvs health and unitedhealth look over here, they're all down 4 to 5% this morning on this news if you look atthe insurers, there is some effect unitedhealth, aetna.
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the pharmacies, too, this wouldn't be quite as close a hit. walgreens is down, cvs health, rite aid minorly everybody wondering about amazon coming into this space are they dipping their toe into the water, they're going to figure it out. >> interestingly on this as well, meg, initially they're saying it's just for their employees. >> right. >> maybe later in other areas. when we think of the number of employees, it's sort of close to a billion in that sense, 260 from j.p., we were saying the -- >> 260 from j.p. and i think berkshire has 360, 370,000 amazon has 600,000 because they've been adding employees so rapidly. >> is that enough scale to make -- >> those are worldwide numbers and they are saying this is for a u.s. health care plan. keep that in mind. >> but it's still a significant number of people is that enough for them to make a significant launch and have the economies of scale to make this compete margin wise with anyone else? >> possibly. one could speculate that this is a way for amazon to start kind
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of figuring this out and from there to expand it christina farr on cnbc.com has noted that amazon has explored creating its own internal pharmacy manager a lot of people will be wondering if this is the first step bezos is promising on the health care space we've heard so little from them. >> by the way, is this the plan that they've been working towards or is there something else in the works for amazon, too? >> moving into supplying hospitals with medical supplies. the big question is, would they be selling drugs >> would they be happy not doing that i expect not the first launch into the space is not proper. again, as we said earlier, does that mean they're willing to make zero margin is that a bigger threat to the existing players we'll have to wait and see.
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>> it's a not for profit that is going to serve these companies at least in the beginning? >> that's what the two-page press release says >> it's not even two pages we are filling in a lot of blanks. >> we will keep following this very important story. >> not the only one filling in the blanks. it is day one of janet yellen's final fmoc meeting. guess who's here steve liesman. >> this is the end of the by this friday or saturday, trying to figure out the exact day of i guess the transfer of power. >> february 1st. >> february 1st. but there's a day they'll do a swearing in ceremony one at the white house or one at the fed? i'm not sure where it happens. >> does president trump swear in -- >> it's happened in the past >> getting yelled at here. >> keep going. >> taken up so much time.
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>> whatever the reason, let me go on and tell you the expectations 95% say no hike now. 90% in march look at the number of rate hikes expected in 2018 3.21 that's up from 2.8 what that tells you is the average person was in three and the other person was probably more towards two in the last survey now it's 3 or maybe 4. so that fourth rate hike is increasingly being baked into the market you can see that in the next chart we have here if you pull that up. that's the trajectory of surveys. we started off in march, 2.73 was the expectation. sorry, 2.25 was the expectation for this year. now it's back again where it was. we've dialed out a hike, put it back in. next year looking for 2.8% you can see that a little bit better let me show you one commentary we have which is out there there's another way. hurry up and we make mistakes. that's the story fed funds rate forecast, 2.2,
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2.8. john roberts saying we believe that the fed may be forced to raise rates more rapidly than the market is currently anticipating due to accelerating economic conditions and the heeding of the economy. >> one tiny thing out there yesterday with the selloff was a few people worrying there will be a rate hike this week >> yeah. i think there's -- >> chance, zero? >> chance zero, that's not the story. the story is this. we're going to work through this year scott wapner asked me a good question is the market way off sides on this fourth rate hike. the fourth rate hike probability is about 20% right now i don't think they're way off sides because before four has to come one, two, and three, right? so what that means is they're going to do one in march, the expectation is another one in june, another one in september and the question is do they get around to doing that fourth one in december. so the market has time to get right. inflation expectations are moving up. you see the two-year move up, you see the ten-year move up so the market has time to get there. what you've had is this huge spike in rates pretty fast as
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the market gets used to the idea of a quick, by the way, upgrade in growth as well. >> we've also seen yields rise fast internationally which is part of the factor. >> that's the market getting used to the idea that global growth is doing better the question is, do we have inflation to go along with it. >> steve, thank you very much. >> pleasure. coming up, president trump likely will use tonight's state of the union address to build momentum for his infrastructure plan we will speak to the ceo of cgla as we head to break, take a look at futures we are in the red. gotten worse dow looking off about 218 points nasdaq looking to open down about 35 points and the s&p 500 off about 14 points. back in a moment ew new york rise higher than ever. as the world leader in unmanned aerial systems, we're attracting the world's best talent to central new york. and turning the airport into a first-class transportation hub. all while growing urban areas into vibrant places to live and work.
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> good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front
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and center this morning, j.p. morgan chase, berkshire hathaway and amazon are forming a partnership designed to improve employee health care and reduce costs. the partnership is still in the very early planning stages the release is only a page and a half long. berkshire's todd combs, margot sullivan and beth coletti will be spearheading the initial effort the three companies are planning to create a new nonprofit company to deal with all of this the implications are pretty big. we have seen stocks of both the pharmacy benefit managers and the insurance managers under some pressure on the news. dow component mcdonald's is set to report earnings mcdonald's is expected to report profit of $1.59 per share on revenue of $5.2 billion. the shares hit an all-time high. you can see the report up by 30 cents. once again, 178.07 the s&p showcase shows a 6.3%
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year over year, slightly less than the 6.4% figure that was posted back in october wilf. >> a meamon javers joins us. >> we don't know what the president is going to say. we haven't gotten any excerpts the white house has given us a list of the topics in the state of the union address take a look at some of the familiar areas you're going to hear the president talking about including jobs in the economy. the president likes to mention the stock market we'll see if the markets get an explicit shoutout from the president tonight. infrastructure is another issue the president has been talking about. the white house has been suggesting they'll put together a plan with some detail around it will it be $1 trillion will it be $1.7 trillion maybe we'll get some specifics there. immigration is another issue will the president propose a solution to the daca issue what about trade and national security those issues also the white house says will be part of the focus for the president in the
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state. union address tonight. one other thing to look at, wilfred, the president might shout out specific companies as he did in his address to congress last year take a look at some of the companies the president mentioned from that roster the house of representatives last year. >> since my election ford, fiat chrysler, general motors, sprint, softbank, lockheed, intel, walmart and many others have announced that they will invest billions and billions of dollars in the united states they will create tens of thousands of new american jobs. >> i think we can watch for a similar moment tonight in terms of the president's tax cut bill and a shout out to specific companies that have now announced that they're going to be paying bonuses and expanding their spending here in the united states as a result of that tax cut bill. that's something the president really wants to hammer home as a message. one of the big successes of his first year and then look ahead to what his plans are for this year, wilf back over to you.
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>> eamon, thank you very much for that. >> you bet. folks, in the meantime, let's get some market perspectives joining us is anastasia amaroso. >> great new health care as well >> we already do but perhaps >> perhaps we'll see. we'll talk more about that. >> r.j. gall low joining us, he is with federated investors. head of the municipal bond program there. folks, welcome to both of you. look, it looks like the market has been a little freaked out because rates have been moving higher maybe i'm putting this in the wrong context. not used to triple digit declines triple digit declines for the futures and triple digit declines for the dow a lot of it is being tied back to what we saw happen to yields. >> what do you think >> it may be tied back to that but i don't think that's the real reason. the real reason is the market has run a long way in a very short period of time in just looking at some of the nearer term levels we're seeing over bought levels we're seeing that in flows, we're seeing that in hedge fund
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positioning. so it's only natural that there is going to be a pause. >> just because we haven't seen a pull back in so long -- >> right. >> -- if we see two back-to-back days of triple digit declines for the dow, that's the first time it's happened in a full year january 30th and 31st. >> that is pretty incredible unbelievable i do think it has something to do with rates, especially the u.s. dollar. they've propped up a lot of trades whether it's emerging markets, whether it's multi-national companies but as the dollar finds a little bit of the footing here, i think that's what's causing a bit of the reversal in the market as we thought about this week, that was one of -- one of the things that we were noting is you could see a near term pull back but, again, it is going to be one that we want to look through and we want to capitalize on because the longer term fundamentals and everything we talk about, you know, from the state of the union or tax reform is incredibly positive for the markets. >> we should point out that the futures have come under increasing pressure. originally we were talking about futures down by 160 points at
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fair market value. last check we were down by more than 200 points. that might be largely because of unh. dow component is under big pressure because of this news from jpmorgan, berkshire hathaw hathaway. >> pfizer is coming with better than expected. >> the health care news that was announced this morning is very interesting to watch longer term we're actually optimistic on the health care sector and specifically on the managed care companies as well because they're benefitting from not only the growth in the mehdi kade expansion, which we don't think is going away regardless of tweaks here and there, and also just the medicare proportion that is growing due to demographics. i think it's a supportive back drop. >> pfizer came out from better than expected earnings closed at 39.02 and now the bid is at 38.30. r.j., why don't we talk about the bond market. there has been so much attention. we've been waiting and waiting and waiting for yields now we see it.
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people are saying, wait a second, do we want it this quickly? >> well, it's been a rough start in fixed income in 2018. yields are backing up 25, 30 basis points in treasuries a lot of factors contributing to that steve liesman was on earlier talking about the fed hiking that's one of them the ecb seems to be getting closer and closer to an additional taper all those factors suggest yields are rising i would argue that, you know, for a long time the economic growth, which has been very strong lately, had been underwritten by accommodative military policies globally some retracement on those policies is manifesting itself in rates and i wouldn't doubt that the stock market has noticed. i think it has something to do with it. >> r.j., is 2.7% on ten year very important psychological level for bond market investors? many people cited being above that level yesterday as one of the reasons for the selloff. overnight we were back above it again now. >> yeah, i think that's true i think it's ironic 2.60 was
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once a key level, so was two fifty. it seems like every time we hit an increment of ten people identify it as a key level i would say the key level was three. three was the peak on the iend f the taper tantrum. it's been a long time since we've been there until we get there i think this is an orderly backup one that doesn't have to dislocate either economic growth or risk assets if we start to see a spike above there, above 3, i think that would be more of a challenge our call is that rates are heading higher we've positioned short on duration to take advantage of that in a relative return framework but we don't expect a spike so we think what's happening here is so far manageable it's head wind of fixed income returns and we'll see how the broader economy reacts. >> okay. r.j., thank you very much for that anastasia, thank you also for joining us. if we just check in on futures again, clearly down over 200 points now on the dow. as andrew's pointing out already, that's about 0.8, 0.9%.
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the other two indices down only 0.4% it is the dow that has proliferated those losses in the last half hour pharma companies and the like. coming up when we return, the president's going to be touching on his infrastructure plan in the state of the union address we can expect straight ahead with the ceo of the laading infrastructure firm cg "squawk box" returns with that and so much more in just a moment most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. and i recently had hi, ia heart attack. it changed my life. but i'm a survivor. after my heart attack, my doctor prescribed brilinta.
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welcome back to "squawk box" joining us for what will need to make an infrastructure push. cgla infrastructure, the biggest infrastructure company in the united states. welcome. >> good morning. >> from what we understand, maybe you understand something different, the ambition of the plan is to put forward about $200 billion in federal spending and then put a little bit of pressure on both the private sector and states to pony up the rest does that make sense to you? >> it does, actually i think we've had an old and existinginfrastructure model
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how do you do that and how do you do that quickly? because the states and municipalities probably don't have the expertise to structure bankable projects so you've got to replace the old model that's a down model. >> the dems who have said you want infrastructure. we need a trillion dollars coming from the federal government the push back is saying we don't want to privatize the toll roads and the like and other congress people and senators saying, you know what, the states actually can't afford it right now. >> you know, it's interesting. i was listening to senator bourasso and i think there's a conversation they haven't started to have. when you talk about a bipartisan infrastructure initiative, we think democrats and republicans. what you're talking about with bezos, et cetera you're talking about the technology people taking a lead and transforming infrastructure. talking about finance, engineering. talking about the workers who need better jobs, middle class jobs, et cetera, so you've got a lot that you can bring together on a bipartisan way.
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>> are there immediate projects that you have just like in a list in your head in terms of when you look at the country, it would be profitable and meaningful not just creating temporary jobs in terms of the work to create it but long term everything gets built out around it >> it's unbelievable andrew. >> give us a list. give us a little bit of on poe mimp. >> i can give you 20, 30, 40 projects dallas to houston high speed rail project fantastic project. there's a fantastic new technology, natural gas exporting technology all you have to do is dredge port in mississippi gulfport they've been trying to do that for 20 years that will create $20 billion in new investment, new export markets around the world. >> dare i ask -- >> forget about profit what about things falling apart. 54,000 bridges falling apart
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if you stretched them end to end you would go from new york to miami. >> new technology, new financing, metal brings which take half the time to erect as a cement bridge. >> and is a trillion dollars the number to hit in your mind >> i think a trillion dollars, as you know, it's a symbol, right? it's a starting symbol we are probably -- if you hit a trillion dollars, you'd get everybody going. you'd transform the industry this other issue that we talked about all the time, moving from ten years to two years in terms of the approval part of the process, unbelievably well done. >> going from infrastructure and get down to the nuance, they
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don't want it or don't want it this way is that there's a worry when the private sector gets involved, invariably the private sector is going to look at the projects that are most profitable in areas where there might be people who are more affluent and that areas that are in perhaps the most dire straits in the most desperate need for infrastructure won't get it. do you think that's a fair argument or not? >> that's a great argument that's actually true i do infrastructure projects around the world you have to do probably two different things to create this actual conversation in terms of a bipartisan initiative. one of them is the government needs to be strong enough to enforce the agreements so you get the kind of performance that the private sector says they're going to give for 30 or 40 years, right you've got to be more capable. but it may make sense to have a conversation about a national infrastructure bank because the canadians just launched the last oecd country except us to launch a national infrastructure bank the focus is on exactly those
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issues, getting projects up and running in rural areas, water projects, all of that that tends to get ignored by the private sector. >> then the other question i was going to ask, invariably you have these states that don't have the expertise to actually make these kinds of investments. >> right. >> these are massive, big investments. what do they do, hire the consultants. invariably something happens, the consultants sold them down the river because there was sort of the agency problem. little man who didn't have the same skin in the game. how do you change that dynamic >> that's -- you know, that's what's going on in the u.k. right now, right pfi is under a huge amount of pressure after 20 years for that very reason. i think one of the things you've got to start to look at is what kind of projects we need and how you get the private sector and the public sector actually working together it's not just ppps there's seven different waste. >> ppps being. >> public private partnerships outright privatization, acquiring assets for 20 or 30
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years to use, et cetera. >> right >> there's a lot of different ways to do this. >> we appreciate it. >> thank you very much. >> nice to see you. >> nice to see you. >> let's keep talking about this because i imagine this is going to be a big topic for this evening and hopefully for a long time. coming up when we return, the national economic council director gary cohn will join us ahead of the state of the union address with the president we have that interview at 8:00 a.m. eastern time. so much to talk to him about checking out the futures we have said it before, would he will say it again. it has gotten worse. the dow looking like it will open off we are now in triple digits territory. dow off 232 points nasdaq looking to open down 39 points s&p 500 off about 16 points. it's really the dow that is taking the markets down right now. we'll spend some more time on this european markets also t rinheed this morning "squawk" returns in two.
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breaking news this morning there's a partnership formed designed to improve employee health care and reduce costs they're going tow creating a not for profit company to figure out these things they are saying this is something that could be used as a blueprint for other american companies as well. take a look at pharmacy benefit members. express scripts.
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cvs health and unitedhealth. news hitting insurers. the pbms and insurance companies where you can see extra fat trimmed by cutting these guys out. unitedhealth down by 6.2%. aetna is being bought by cvs is down 2%. anthem is off and humana has a deal in the works to buy a line of hospital operators down 3.8%. >> j.p. stocks down 3% >> before this news hit the dow was down 160 points. >> i'm raising the question if your stock is starting to do something, does that in fact concern you? this becomes a bigger part of the pie. clearly this is more of formation and potentially the middleman rather than insurance company themselves
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who are the health insurers and pbms. >> for those particular -- >> for amazon, jpmorgan and all the berkshire hathaway companies. if you can figure that out you win the game. >> probably even out a few employees. i absolutely agree >> we will have more on that story throughout the show. meantime, a fed meeting. earnings and the state of the union are in focus for investors. there are some international names that investors may want to take a look at joining us, the director of research at janice henderson investors. good morning to you. >> good morning. >> let's talk very quickly about the health care sector in the u.s. >> sure. >> what do you think the implications are of this clearly some big declines in the health care names. >> health care is ripe for disruption, right? combination of a great reinsurance company and online
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base and insurance company could result in something that helps bring down costs for the average american i view it as positive. the incumbents are going to be under pressure. >> in terms of the banks stepping away from that particular announcement, i notice goldman sachs is one of your picks >> what's happened in the last two days, volatility we haven't had volatility for a whole year what's one of the best ways to play are one of the brokers. goldman sachs has lagged it's one of the best players in the fic area they have continued to keep that operation robust many of their peers have reduced their exposure there i think it's a great way to play the volatility. >> looking internationally, we've focused on amazon here alibaba is a name you're still long despite incredible performance. >> incredible performance. trading 20% discounted to amazon at the same point it has a larger addressed bull market and
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a growing population it's much better positioned to expand and it has less competition. >> when we see that pull back in stocks, do you think that's justified. broader u.s. valuations, international stocks more attractive earning >> yes absolutely if you look at where the valuations got to, there had to be a bull pack it's been a year since we've had any kind of market correction that's of size we needed to have something like this i think there's probably potential down side even further. >> how much of a percentage? >> i think we could have another 10%. >> there we go thank you very much for joining us caramel wellso from janus henderson. >> mcdonald's and market reaction and right after the break, interview with national economic council member gary cohn he's going to be our guest we'll hear from we're going to hear from the president. "squawk" returns in a moment.
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breaking news. amazon, berkshire hathaway and j.p. morgan chase are joining forces can they revolutionize the health care system we have details on their plans straight ahead. the state of the union the president set to deliver a major address tonight. we're going to get the inside line from gary cohn. plus, stocks under pressure. futures with a lower opening as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york. this is "squawk box. good morning and welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square i'm andrew ross sorkin, becky quick and wilfred frost hanging out with us today. joe is off we hope he gets better soon. we are down triple digits.
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dow looking like it's going to open off 230 points this morning. nasdaq looking to open down 40 points s&p 500 off 15 points. all of this on the back of some news that jeff bezos, jamie dimon and warren buffet are getting together to create a not for profit health care operation that could really challenge some of the traditional players and some of those stocks down in a big way. we also had some news though from pfizer on the other end with good news we're looking at all of that go ahead. >> well, let's very quickly tell you about mcdonald's earnings. out with the earnings right now. if you look at an adjusted number which excludes the impact from the tax act they earned $1.71 a share. that compares to the $1.59 that the street had been anticipating revenue coming in better than expected $5.3 billion versus $5.22 billion that the street was expecting. the stock is down a dollar that's a decline of half a percent.
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the other metrics, u.s. comp store sales up by 4.5% global comps up by 5.5%. there are some interesting headlines popping out from this. they're talking about how sales from company owned restaurants in the fourth quarter were down pretty significantly where did i see that number? fourth quarter sales by company owned restaurants down by 27%. the franchised restaurants fourth quarter revenue was up by 12%. a lot in the mix with this you can see the street's bouncing all over the place. there's some confusing numbers because the tax act had a pretty big impact if you strip that out, they earned a number that was -- the flat number that they earned was -- where did it go i lost it again. sorry. reading through the release as we do this if you're just looking at the straight numbers it was earnings per share of 87 cents. it was one-time issues with the tax deal would have been an adjusted $1.71. among the headlines this morning, j.p. morgan chase, berkshire hathaway and amazon
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are going to form a partnership to reduce medical costs. dow component pfizer is out with quarterly earnings the drug maker beating on the top and bottom line. it becomes the latest company to announce a tax-reform related bonus for employees as well as increase investment. pfizer down 1.5%. joining us right now to talk about what we expect to be hearing later today, are we going to be talking to r.j. right now? senior analyst at morningstar. r.j., what do you make of the mcdonald's numbers >> yeah. right in line with consensus look at the u.s. numbers right there at four, five. market was looking for a little bit higher generally a pretty good number they had the new dollar menu in place as well as mobile ordering
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and delivery going to be ramped up on top of that, too, was some of the tax proceeds they'll be looking to expand their experience of the future initiative the international markets look strong it was a pretty good quarter a continuation of a lot of the initiatives they have in place seems like it's working. >> fourth quarter earnings down 40% just on the expense of the tax bill that's a one-time issue. the stock traded down by a dollar, now down 28 cents. how would you be telling people to read this you sound like it's pretty positive would you trade it up here >> yeah. if there's any kind of weakness on the quarter, take advantage of it. i think this is a name that has a full head of steam going into 2018 a lot of the initiatives i just mentioned. i think that's going to keep them at the top of the restaurants. clearly everybody is trying to chase them now with the value menu i think that's going to be a positive catalyst to drive them into the door continuing to recapture some of the market shares beyond that i think they're going to be able to keep those people coming back with some of the other initiatives in place
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i take it as a positive. it will be very interesting to see what they do with the tax proceeds here. i think that could accelerate some of the experiences that mcdonald's has run into. it's positive with the franchisees. that will make them willing to invest in the experiential initiatives. this is a pretty positive quarter. generally i'm a pretty positive read first take. >> r.j., thank you. >> as we've been discussing all morning, the president set to give his first state of the union address. joining us is gary cohn, the white house chief economic adviser coming off what was a very welcome speech in davos, gary, that i've been told or at least have reported that you were behind and written. so congratulations on that what is it that we can hear tonight given how divided this country is that you think can be pursued in a bipartisan basis?
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>> well, thanks, andrew. thanks for having me on this morning. you know, i think tonight you'll hear a continuation of what the president was talking about in davos. he will talk about the strength of the american economy. he'll talk about how america is open for business. he'll talk about how we're competitive in the world he'll talk about job creation and how we can hope for higher wages and more participation in the labor force and how he's driving companies to grow their businesses in america because that's really one of the key components of president trump's economic platform. he'll also talk about infrastructure, which is the next leg of the stool in our economic agenda. we started with reg reform, we went on to tax reform and now we're on to infrastructure so he's going to talk about the infrastructure piece of the agenda as well going to touch on national security which i think we all care a lot about going to touch on border security and he's going to do all of that and talk about it in terms of what it means for america, what
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it means for american people. >> speak to the infrastructure issue. how many details are we going to get on that? there was a draft that circulated around of the idea of $200 billion number of federal money that will get paired with federal money. people like chuck schumer says it has to be a trillion dollar all come from the fed. you can't be put all the pressure on the states then you had other democrats saying, look, we don't want to privatize the toll roads >> well, andrew, as you know, we've got to do a bipartisan infrastructure bill in the senate we need 60 votes in the senate we're going to have to create a compromise there's people that want to go out and spend the entire infrastructure there are people that don't want to create any deficit to build the infrastructure what we're trying to do is find a compromise in the middle what the president is going to talk about is two key principles on infrastructure. he's going to talk about $1.5 trillion in investment more importantly, he's going to talk about streamlining the approval process on
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infrastructure right now we have an infrastructure approval process that takes seven to ten years to build a relatively simple road we need to streamline that to less than two years. the president might mention streamlining it into less than a year to get infrastructure improved there is plenty of money in the system, in the private sector, in different bonds that we left in the tax code to finance infrastructure to allow infrastructure to be built the problem today is really the approval processes. >> can you get infrastructure done when he's going to also talk about things like immigration and the wall which clearly are going to be divisive >> i think we can. i think we all know how important infrastructure is to this country and how it is holding back economic growth and it's holding back productivity when you look at some of the economic data, the one number that people pick on is productivity we need more productivity growth our infrastructure in building our infrastructure and rebuilding our infrastructure can clearly lead to productivity look, the immigration issue is
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upon us. i think that issue is going to get solved the president's going to talk about it in a very amicable way tonight. hopefully we can get that done and out of the way in the next few months then we'll move on to infrastructure over the springtime. >> gary, put your goldman sachs hat on. >> andrew -- andrew, i'm he not allowed to do that. >> we all want to know what you make of the rise in yields recently and how the market should think about that. >> look, i think the markets are trying to digest some change in monetary policy in the united states and perceived monetary policy changes in other central banks around the world we've gone from quantitative easing and central banks to buying bonds and selling and liquidating bonds. we're seeing more supply side stimulus into the economy and i think people are trying to figure out where the new rates should be or where the new normal should be for rates
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remember, we're still at a 3.7% rate in ten year we're substantially below the normal rate in a ten year if you look at a 100 year chart i think people are trying to figure out where rates should be in this economic environment we have yet to see inflation come back in the united states people are anticipating some inflation and, by the way, we would not be disappointed to see some moderate inflation come back in the system but we've yet to prove if we can get inflation back into the system so i think people are trying to figure out what the new world is going to look like with a tax stimulus, with infrastructure spending in the system, and with -- and with full employment and some wage growth in the system and that's what's sort of going on in the market right now. >> in terms of inflation, i don't know if you saw the story this morning, jeff bezos teaming up with jamie dimon and warren buffet to create new health care, potentially joint venture, not for profit talk about reducing inflation. i mean -- >> yeah. >> -- it's going to make it that
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much harder. >> andrew, look, we're doing the same thing here in the white house. if you look at what we did earlier last year, we created associated health care plan, which is the exact same thing that those three companies did we created an associated health care plan with smaller businesses could pool their employees together to get more purchasing power so they could save money on health care. we agree in that philosophy. we think that individual workers should have to pay less for health care and we want workers to pull together that's just the reality of where we are today that's why i said, we're going to have to see if we can create inflation in the system. it's not a given that we're going to create real inflation in the system. >> gary, looking at the market and how far it's come, how resilient it's been. a lot of smart people are looking at this. the wealth factor matters. when you start looking at the economy and where we're headed, how much of it does the wealth factor play into that. if we did see a pull back in the markets, how big of a concern would that be in terms of gdp.
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>> becky, look, we're going to see pull backs in the market no one should think that markets go straight up that would be unrealistic. markets tend to gyrate. you have to look at them in the trend and look at them some period over the time to think that markets are going to go up every day of the year would be a ridiculous thought. we're having normal market behavior where we do get some pull back. >> not really. we haven't seen two days in a row of back-to-back declines in a year. >> well, look, we're seeing it two days in a row. at this point we're seeing two days in a row. hopefully we don't have two days in a row that's just normal behavior to get a couple days in a row of normal decline look, there is a wealth effect going on and the president will talk about that tonight. he'll talk about, you know, this wealth effect is being felt through the whole economy, is being felt through the pensions, is being felt through the 401ks. everyone getting to benefit from a rising stock market. it doesn't just affect the wealthy, it affects every worker in america that has a retirement
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savings account. >> gary, just a quick question we heard yesterday that jamie dimon was going to stay as chairman and ceo of jpmorgan for five more years. what do you reckon your old pal lloyd blankfein is thinking? more than five years or less than that? >> i have no idea. you have to ask lloyd. i don't know. >> couple quick questions before we let you go. this is janet yellen's last week jerome powell will get sworn in. what is the philosophy and how have you thought about that when he was selected? >> look, we spent an enormous amount of time in that selection and we're still spending an enormous amount of time in the vice chair selection which hopefully we can get out shortly. >> can you give us a hint? >> i could but i won't and, you know, in picking jerome, you know, he really had a philosophy that was very much in line with the president's philosophy on monetary policy and how the fed should look at the economy, how the fed should
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react to growth, how the fed should look at inflation and we're excited with him taking over chair of the fed. that said, janet yellen did a spectacular job. we should all be thankful for what she did in her tenure at the fed as well. >> can the pace of deregulation pick up once the new appointments are in place? >> no, the pace will continue to pick up as we get more and more of our people through the senate and approved into their seats. the first year of an administration is really a big personnel year where you're nominating people to run agencies, you're nominating board members and it takes you an enormous amount of time to get those people nominated, get them through the process, get them into the seats. i think year two of the administration you're going to see a lot more reg reform than you saw in year one. >> gary, there's been a lot of speculation that if you could succeed on tax reform, which you have, that you would step down afterwards you have succeeded
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what's keeping you there now >> andrew, i don't understand why you guys keep asking me this question i did get tax reform done with the president. >> you should be proud >> i'm very proud. i'm very excited about it. there's an enormous opportunity to get infrastructure reform done there's enormous opportunity to get banking reform bill done enormous opportunities i'm excited. >> you want air force one. the davos. doj role what do you make of what's taking place in the last 40 hours when it comes to andrew mckab? >> to be honest with you, andrew, i was sound asleep on the way over i didn't hear any eruptions. >> well, we will leave the interview there. gary, great to see you thank you for joining us this morning. thanks thanks for having me still to come, joanne
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welcome back to "squawk box. national dialogue has picked up
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after the me too movement. our next guest says it is time for men to join the conversation she offers steps for both genders to try to work towards equity in her new book that is out today. the new book is "that's what she said." joanne lipman is here. she's former editor in chief of "usa today." joanne, thanks for being here. >> thank fors for having me. >> i'm going to push this book out faster than anybody anticipated? >> yeah. i've been working on the book for three years. the reason is because there are so many issues women face at work and we talk about them all the time being interrupted, overlooked, marginalized it's all of those issues put together that enable an environment that you can have sexual harassment thriving women have been talking about these issues for years what we haven't done is talk to men about them
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the fact is that women talking to each other, it's half of a conversation at best it solves 50% of the problem. so we really need men to join us. >> the problem. >> you're interrupting her >> the fact is i love that we have men who actually do want to talk about it. >> tell us what we need to know. >> you have at least two of us you have two guys. >> the first thing that you actually do need to know is not to be afraid of this conversati conversation i have to tell you this is a great conversation we have an audience that's mostly men the fact is until actually the me too movement started, men would just kind of freeze up and not want to be part of this conversation and, in fact, actually, this book started with an article that i wrote three years ago. i talked about that article on
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air with you guys and joe was here and you and joe didn't speak. it's fantastic you want to talk about it. >> how much progress has been made since it took off and how much further is there to go? are behalf way there >> there is such a far way to go in the book i document through research and through stories and i spent a lot of time, i crisscrossed the country, what i was doing is talking with primarily men, male executives, who were trying to get this right. so i spent time with google, facebook, consumer companies like kimberly-clark. i went to iceland which is the number one country in the world for gender equality to understand what are some steps and tactics we can take. >> can we talk about the gender pay gap? >> sure. >> huge issue. >> huge. >> the question is, who is responsible for fixing it? the reason i ask you this is -- and i believe you have some of this in the book but it's also reflected in so many other studies that women do not
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negotiate for more money as aggressively as men do and so then the question becomes, if you're on the other side of the negotiating table, i.e.,, you're the employer, usually looking to, by the way, pay as little as possible and yet keep that person or attract that person to come, is it on them is it on the employer side that they're supposed to say, look, you're not asking for enough money. i should be paying you more. that's part of the dialogue. >> not just the hr part -- >> yeah, yeah, it needs to come in the ceo this is not an hr issue. we have to get past it. >> is it incumbent on the company or is it incumbent upon women, dare i say, to negotiate more aggressively? >> both. both so from the company perspective, i learned this -- as a long h-tm manager, it changed the way i managed. one of the things i became aggressive about is lining up my
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own team to make sure that people were paid equitably so it's on the manager for that point of view. i think that there can be legislation. i mean, there's now legislation in the u.k. that they have to publicize the gender gap iceland passed a law where you have to pay them equally but i would also say that women actually -- we have been told you have to ask for what you're worth, demand to be paid what you're worth women, my research showed, actually we don't know what we're worth in many cases. so this starts very young. all of the issues we're talking about don't start in the workplace, they start young. so, for example, there was a study done of 6-year-olds, first graders, where boys and girls were asked to do a task and then to pay themselves in hershey kisses the boys paid themselves more hershey kisses than the girls. >> are you kidding me? >> this starts at age six. >> they repeat that experiment in junior high and high school with money the boys pay themselves as much as 78% more than the girls do.
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so one thing that women can do is i think we're in a fortunate position now where there's a lot more data available. data solves a lot of ills. >> just the openness of knowing. >> knowing what you should be paid and seeing what others are paid in your position helps. >> can i ask you also about what i see happening a little bit you're starting to hear a little noise about almost a backlash in the me too world in this respect. >> yes. >> men, senior men who are saying, you know what, i'm not going to dinner with a woman who works for me, an employee who works for me i don't want to put anything at risk and whether that unto itself is, therefore, going to change the dynamic with which women have the ability to climb the ladder, if you will, because men look at this whole situation and say, you know, i want to be in an office i want the door to be open i need to be in a -- there's a lot of conversation and that can have a real impact on the culture. >> without question. that is the thing that i fear the most about a backlash with
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me too however, first things first. first of all, if you're a guy and you haven't -- you know, you're like you, right good guys. >> i'm scared to talk to most women so, you know -- >> so that won't change, but -- no, but the fact is, look, most women are not -- if you're a perfectly good guy, you are not -- you're not in trouble, right? you're -- you should continue your behavior. the fear 235k9 factor is damagir men. you've got to not be afraid of it it doesn't hurt to ask i was in davos last week, as were you guys. one of the things i noticed when i talked to executive women there was they said, hey, there's a change in behavior in the men and very often even for something like you see a guy, you know, you give him a hug or vice versa he says, uh-oh, is that okay >> i saw that happen all week last week. >> as the women who i talked to said, first of all, generally, yes, it's totally fine but also, we're not offended if you ask us, right? you only have to ask once. so next time we see each other you can --
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>> right. >> you don't have to worry about that. >> no more european kiss on the cheek. >> that's all fine, right? if in doubt, ask. >> the fact is -- >> or follow the lead of what she does. >> do you go for the handshake. >> the double kiss, single >> depends who you are. >> i think you do whatever you've always done and if you feel -- >> what you always did was not right? >> you know what, you probably know if you're a creepy guy, right? so most men are not. most men are not and there are some cases where men are a little bit clueless, they might do something that makes a woman uncomfortable. i think first of all women should feel free to speak up and other men should feel free to call out bad behavior. >> joanne, thank you very much the book again is called "that's what sheai sd. we'll talk again soon. >> excellent. >> great book. great conversation td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long...
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♪ ♪ when we come back, alaska senator dan sullivan will join us to priew evtonight's state of the union address. stay tuned "squawk box" will be back after a quick break. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time
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♪ ♪ welcome back to "squawk box. the fed beginning a two-day meeting in washington and steve liesman joins us with the findings of the latest cnbc survey steve? >> thanks very much. we asked our 40 respondents who gets what from the tax cut in other words, what's the cut
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from the tax cut let's take a look at the expectations for growth from the tax cut. the first thing you'll see here is they have increased their expectations for this year looking for about 60 extra basis points of gdp. that's up from call it 45 in the prior survey and in the december survey 19 another half of a point and then average over the next ten years is 44, 45 basis points that's unchanged seeing it diminishing over time. pretty good pop. they've pulled forward some of the benefits who gets what? what's the cut from the tax cut? 8% say it primarily benefits workers. 54% say shareholders and executives 39% say both we went deeper if you have a dollar of tax cut, how do you think companies on average will apportion it? here's the data. 36% or 36 cents on the dollar goes to share buy backs and dividends. 22 percent to capex. 32% to debt reduction. just 12% goes to higher wages.
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we're seeing some stuff that's like this. the company will say we will give you 20 million, 15 million to workers just to be fair on that 23% of the capex, the expectation of the administration is you get the capex, it leads to the pro duct tifft it leads to the higher wages this stuff we're seeing up front is not precisely what guys like kevin has set expect the process to be. it takes place over time that wages go up. right now the expectation is that it's about 12 cents on the dollar some of the other things we've seen, lower prices could come from the tax cut, higher salaries also an increase in catch earnings. >> a common strategist as opposed to the ceos. >> we're working on some other stuff. we'll ask the cfos look at the numbers you've seen when these announcements come out. how much is really going to workers when you see it's a portion of it. it's not the majority of it. and what the expectation among the administration is that it's going to be 70 or 80 cents on
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the dollar that was always on the high side in terms of where conventional wisdom is. >> thanks so much. >> now to washington and this evening's state of the union address. joining us right now is alaska senator dan sullivan good morning to you. >> good morning. good to be back on the program. >> senator, what are you expecting to hear and what do you want to hear >> look, i think you saw gary cohn at the top of the hour talk about infrastructure and how important the permitting side, streamlining our permitting is going to be. the president's going to talk about the economy. the one thing driving the economy that i would welcome a chance to hear him talk about is energy we have such great opportunities with this american energy renaissance that's happening all over the country it's on the opportunities we have with regard to energy what the president calls energy dominance for america. >> gary cohn said it has to
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happen on a bipartisan basis you're hearing people like chuck schumer say it's a trillion dollars. it has to come from the federal coiffeurs. it's not something they want to put the pressure on the states or get the private sector involved. >> look, i think there's good opportunity. it's a bill rebuild america act. we have a lot of republicans on trying to get some democrats on. it's all about permitting reform there's a lot of focus on the dollar amount. we could spend a trillion dollars of federal government money and if we don't reform our broken permitting system, 15 years in the seattle tacoma airport to permit a new runway, that money is going to stay on the sidelines. so, you know, we have a lot of support from my bill, for example, from trade unions the labor remembers, the operators, they are all up for
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significant reform there's a pathway forward. got to include some money. private sector money as well if it doesn't include permitting reform, streamline a broken process in america, it's not really worth it. >> where do you stand on the wall that's something we anticipate hearing from tonight given the chance for bipartisan support of something like an infrastructure plan to the extent you think there is some, clearly the wall and issues around immigration are more divisive. >> i think the white house offer that came out last week was a serious offer. if you look at how they described the wall, it was essentially a system for border security now this shouldn't be that controversial. every nation has the right to secure border. it would actually be part of an infrastructure plan. so i think the fact that you saw the white house's offer on immigration take fire from some elements on the left and some elements on the right means that they're actually kind of in a sweet spot so i can see a deal on immigration. there's certainly a lot of discussion on it, but, you know,
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securing your country's borders should not be a controversial topic and it typically isn't in these halls. >> okay. senator, we're going to leave the conversation there we look forward of course to the president's state of the union this evening talk to you soon. >> thanks. in other headlines this morning, some new questions about wynn resorts in the wake of those alleged misconduct claims contessa brewer joins us she is live in las vegas this has to be something that is certainly shaking up the strip, contessa >> reporter: not only that, becky, but now the booking cancellations have already begun. the republican governor's association has withdrawn its conference slated for 2020 here at the wynn. it's the first high profile convention to cancel, but it may not be the last. that's something that investors are worried about. the non-gaming revenue is so important here in las vegas. the majority of the revenue for las vegas for wynn comes from non-gaming sources and conventions are a big part of
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that if they have a big convention space, today the insiders tell me that nevada gaming parole board is very active when it comes to licenses. that regulatory group is not scheduled to meet until later this week. the massachusetts gaming commission is not waiting. they have scheduled a special hearing tomorrow promising to tweak these wynn allegations with the appropriate sense of urgency and rigor. wynn board members are not speaking publicly now. wynn resorts has declined our request for interviews, but the president of wynn las vegas sent his employees a memo saying in part, we are still supportive of mr. wynn and his leadership, and while it's unfortunate that the news media has been used to assail mr. wynn to us in this way, we are doing everything we can to protect our employees from these types of attacks and publicity. now i wanted to talk to some wynn employees i asked them what they make of
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the allegations and scandal. guys, they shrugged and said, this is is a nice place to work. that was the end of that. >> contessa, although anybody who is looking at this saying steve wynn is the major shareholder and that what he says goes would have to think again when it comes to some of those licensing issues, correct? >> reporter: yeah. absolutely and don't forget, when you're talking about the projects under development, the wynn boston harbor is planning to employ some 4,000 people, is currently employing thousands of people in the construction of that project and all of these people have got to be eyeing what's happening with the sense of trepidation about what happens next. are they going to feel the impact, somehow, of this scandal itself and on the board itself we had talked about this yesterday, but the pressure on the board to take some divisive action when it comes to this right now they say they've launched an investigation but they won't name who's on the commission to do the investigating. >> hey, real quick what's the take on bookings just broadly speaking
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are competitors licking their lips saying maybe they'll lose business -- that wynn will lose business, not profits and other corporations will say i don't want to book at a wynn hotel is that on the table >> reporter: yes if you take a look at twitter, there's always the hashtag #boycottwynnresorts. i did speak to a competitor who told me they think the fallout from this will be limited to wynn they don't think that they're going to feel the impact in the decline in bookings. don't forget because of the tragedy that happened in october, the bookings had somewhat softened for the fourth quarter. they were expecting that to bounce back somewhat for 2018. we'll have to see how this affects those numbers when we get the next earnings report. >> okay. con tatessa this morning what happens in las vegas clearly does not stay in las vegas. thank you for this report. when we return, amazon, berkshire hathaway and jpmorgan a ungs noing a perhaps historic partnership. we'll discuss the move and what
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it means for the health care sector when we return. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management. today, the new new york is ready for take-off. we're invested in creating the world's first state-of-the-art drone testing facility in central new york and the mohawk valley, which marks the start of our nation's first 50-mile unmanned flight corridor. and allows us to attract the world's top drone talent. all across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov.
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welcome back, everybody. amazon, berkshire hathaway and jpmorgan are joining forces. can three of the nation's most powerful companies revolutionize the health care system ask a sector analyst anna gupta is with us right after this break
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welcome back to "squawk box", everybody. jpmorgan, berkshire hathaway and amazon are forming a partnership designed to try to improve their own employee's health care and costs but they say they could roll it out as a blueprint for others if this works out joining us to discuss what this means is anna gupta. she covers the health care services arena at learing.
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thanks for being here. >> thanks, becky thanks for having me. >> this is pretty bare bones stuff. a page and a half press release that was released two hours ago. >> yeah. >> so we're all trying to fill in the blanks. we have seen the stocks move pretty precipitously what do you think? >> it's prodder than drugs, that's what it would seem to me. >> everybody thought -- >> drug supply chain was the speculation. all of this while this announcement comes on the heels of a year long speculation practically. i think they realized that the health care system is complex, that the drug supply chain cannot just be probably isolated out like this so my guess would be, and as you say, it's very bare bones, but that they're looking at what they need to do to enable maybe physician works with technology. what can they do to engage consumers in the u.s. employer-based health care system so it's broader than drugs already a lot of investors are calling and speculating what this means for managed care, for
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hospitals. my take on it would be they've said this they'll focus on the technology enablement and they've said it's very complex it's going to take a long time. >> who are the current insurers that service jpmorgan, amazon, berkshire hathaway employees >> as far as i know, i think amazon still has express scripts. as far as the pdm. as far as the health insurer, i'm not entirely sure. jpmorgan i think is cigna and unitedhealth group they have a sliced two players berkshire i really don't know. >> how quickly do you think that a partnership of this sort, obviously bare bones plan at the moment, what we don't know is whether they actually have a more concrete plan that they're not going public with yet or are they going to take some time now to build that. >> figure that plan out. >> but if you were speculating, how quickly could they get their act together, dare i say >> if you're talking about transforming the whole thing, it will take decades. i actually don't think they'll go there. >> just for the employees of
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these three companies? >> oh, just for the employees of the three companies. >> could you do something interesting in 12 months >> depends if they pick maybe consumer engagement and analytics and on the physician and hospital side, technology enablement, they may be able to drive more transparency, a little more engagement i do think united and cigna, which already serve jpmorgan, as i said, are very advanced, very sophisticated players, and i would think they would want to partner with them more than work at loggerheads. >> what do you make of this line in the press lease where they say we're going to form an independent company, quote, that is free from profit making incentives and constraints if this is going to be to purely c to serve their customers, is that particularly worrying for the existing players >> i wonder if they mean -- do you know about the health care alliance, hca? it seems somewhat similar in a more concentrated three player,
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you know, kind of partnership and alliance and what they would do then is, as i said, think about what are the inefficiencies in the consumer side, in the drug side and the physician side you know, i don't know what they mean by independent company without profit taking objectives it feels more like a consortium, structure. >> to serve their employees? >> exactly. >> their costs >> yes. >> clearly it is a margin that is currently being made by somebody else. >> yes. >> can you imagine walmart deciding they're going to team up with, i don't know, name another big employer, three or four other companies, try to do the same type of thing and that's where this all moves? >> or other companies trying to team up with these. >> so we already have hca which i spoke about, 46 employers. now we have this consortium. there are three drug purchasing consortia. walmart is part of one of them already. so there's red oak with cvs. we have webad with walgreens and i think it's underestimated how
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complex it all is. just by creating five or six or seven new consortia i'm not sure it will work that being said, i wouldn't under estimate the -- you know, the financial strength of this particular consortia. >> ana, thank you. always gate to get your perspective. >> thank this. >> thank you >> i want to say something while joe is not here. you know how you get the biggest of all you have the national health >> you would be having tweets just a moment. >> in the meantime, i want to get down with the new york stock exchange lets get with jim cramer >> this is about amazon buying whole foods. amazon will report later this week and i think they can flush this out is it a national healthcare
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service? i think it will be more efficient. >> yeah, more efficient. when you go to united healthcare, they have a thing called optimum and obviously, jaime and jeff, they must not think it is as good and i hesitate to disagree with them they're pretty smart guys. >> jim, tell us which way and it is hard to say, the reason i ask -- >> it comes down a little. >> i just don't understand the desire at this moment to buy things you have 50% of people don't like the president and the president is going to come on tonight and he's going to say the stock market is great and a lot of people will say this is a great opportunity to get ahead out of that.
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we do have an amazing run and you are talking about how good of january been. lets wait a little you got some dow stocks. and mcdonald's reported great quarter and it is down intel had absolutely a great upgrade today. do you think amd is not going to take a shot at intel and even netflix is down. people say wow, how come intel is down? we are in a blast here >> we just talked to contessa in vegas, what do you do with wynn right now? >> stay away >> what's the edge there >> jim we can say that when joe is not here >> you have been working since
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5:00 i love your five today >> you can see me at:0p. 30 m. >> jim is working all day and all night >> he's our number one fan, there we go. obvious.
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box. president trump's state of the union address is hours away. it comes just days after his speech of the world economic forum in davos, switzerland. joining us now is tim wallace. a little bit of a preview and break down what do you expect to hear and is there a chance that there could be something bipartisan comes out of it? >> there is always a chance. what i expect to hear do define what they mean by the state of the union and this president will be triumph, usually presidents reach something as separati aspirational and providing a speech my guess is you will hear some of that from the president of different terms and infrastructure and certainly immigration and national security, i would imagine as
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well >> can you speak to this there is a tale of two presidency here and another presidency is in mesh in all sorts of scandal if you will and headlines around mccabe that's been in the headlines for the past 24 hours and the mueller investigation. does he address both of those presidency >> yes, the president has not been hands on details of policymaking he's given that responsibility to members of congress they have done their job at the same time, the president wants to be seen as the leader of the party, that's what i mean by the state and the vision, as in congruent it may seemed, the president seems to be juggling
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these two jobs >> given what we saw in davos, a lot of people called it presidential and he state on script to those of what he may say, do you think the speech is similar or hell go off script? >> there is a chance that he can go off script. you have to recognize that in his second year of the administration, the reviews he got coming out of davos of being a pragmatist and talking down and reaching out to his counter parts, that's a vein that he wants to continue and particularly he's going to lean in into bipartisan ship and what's necessary. >> do you have a sense, do you look at that speech last friday and say that was a pivot or do you say that was a one day
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phenomenal or do you look at him going after jay-z on twitter of the flip of that, how do you think about it >> the president likes to shape his version of reality and at the same time he and his staff begin to understand of the constraints of policymaking. tax cuts of nearly ten months of difficult work trade policy is not unilateral there is not a player in the trading system who has the ability of global supply change including the u.s. the president begins to understand and deals with constraints and not only globally but december tiomestic. >> kim, appreciate your perspective and we'll be watching this evening. folks, take a look at our future, started out in the negatives.
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three hours later, you see the dow is down 230 points below fair value nasdaq off by 55 we'll don't watch this as we get closer to the opening bell will, thank you very much for being with us today. >> pleasure. >> that does it for us today make sure you join us tomorrow, right now it is time for "squawk on the street. ♪ good tuesday morning, i am carl quintanilla and jim cramer and david faber. futures indicate the first back-to-back triple digit loss for the bill, the state of the union tonight and big news in healthcare and home prices are up 62. ad

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